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FERC's GulfTerra Orders: Chnages in the Pipeline

A new FERC decision veers away from congressional intent not to burden intrastate pipelines with interstate policies.
Fortnightly Magazine - May 2004

transportation services in part by not burdening them unnecessarily with NGA rate policies. FERC's GulfTerra orders would balance that goal not to burden intrastate pipelines against the additional purpose that NGPA intrastate pipeline transportation rates must not exceed reasonably comparable rates for similar NGA interstate pipeline services.

Given likely FERC disinclination to give intrastate pipelines a pass on significant interstate pipeline ratemaking policies, and the likely FERC inclination to apply such policies to intrastate pipelines where possible, many of the GulfTerra rate rulings do not readily appear wholeheartedly to encourage NGPA intrastate pipeline interstate transportation. In the future, prudent NGPA intrastate pipeline rate planning for interstate service will consider and proceed consistently, and more cautiously, given the ratemaking decisions in the two GulfTerra orders.

Endnotes

  1. , 99 FERC 61,295 (2002); order on reh'g, , L.P.,106 FERC 61,184 (2004) (EPGT changed its name to GulfTerra in 2003).
  2. FERC allows intrastate pipelines either to base their NGPA rates on any rates they may have on file with the appropriate state regulatory agency or to apply for FERC approval of their filed NGPA rate proposals. 18 C.F.R. § 284.123 (b). These orders concern the latter election.
  3. H.R. Conf. Rep. No. 95-1752, 96th Cong., 1st Sess. 107-09 (1978); 15 U.S.C. §§717-717w.
  4. , 899 F.2d 1250, 1255-56 (D.C. Cir. 1990).
  5. 15 U.S.C. § 3371 (a)(2); , supra, 899 F.2d at 1255-56.
  6. , 42 FERC 61,015 (1988).
  7. , supra, 106 FERC 61,184, [text para.] P.14 & n.10; EPGT , L.P., 103 FERC 61,181, P. 4 (2003) (order granting market-based rate authority for NGPA storage services).
  8. , 84 FERC 61,238, 62,208 (1998); see generally J.M. Marcoux, "Too Easily Overlooked: Three Rivers Intrastate Pipeline Exemption," 16 , No. 11, 25-28 (2000).
  9. Southern Union Gas Co., not a current GulfTerra Section 311 customer, is a firm intrastate shipper that is reflected in intrastate/interstate cost allocations (GulfTerra proposed two-part rates to the RRC for firm intrastate service).
  10. , supra, 106 FERC 61,184, P. 33.
  11. 61 FERC 61,272, 61,992 n.26 (1992); GulfTerra, supra, 106 FERC 61,184, P. 13 & n.7.
  12. , supra, 106 FERC 61,184, PP. 29-32.
  13. , 90 FERC 61,017, 61,064-65 (2000).
  14. , supra, 99 FERC 61,295 at 62,249-50.
  15. at 62,256.
  16. FERC also accepts GulfTerra's proposal to charge a fuel rate percentage based on an engineering matrix of costs to move gas, requires a GulfTerra plan for making customer refunds and accepts a proposed allocation of $50,000 to GulfTerra's parking and lending (PAL) service, with which GulfTerra had no experience, allowing GulfTerra to use its interruptible transportation rate as the PAL rate. EPGT, supra, 99 FERC 61,295, 62,256.
  17. FERC cites an earlier order rejecting the anti-competitiveness of blended rates in interstate transportation service. , 85 FERC 61,080, 61,281-84 (1998).
  18. , supra, 106 FERC 61,184, PP. 11-13, 15-18.
  19. , PP. 21-25.
  20. , PP. 10, 26-28.
  21. , supra, 99 FERC 61,295 at 62,255 & nn. 36-42.


NGPA Intrastate Pipeline Interstate Transportation Rate Guidelines

Cost-of-Service Issues

  • Presume average risk for your ROE. Using a proxy group of publicly traded interstate gas pipelines largely engaged in transmission service and owning FERC-regulated pipelines, seek to show highly